The Difference Between Operating Income and the Minimum Dollar Return

question 23

Multiple Choice

The difference between operating income and the minimum dollar return required on a company's operating assets is:

• A) the return on investment (ROI).
• B) the residual income.
• C) economic value added (EVA).
• D) the gross margin.
• E) the operating turnover.

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Definitions:

Temporary Working Capital

Working capital that supports seasonal peaks in business.

Seasonal Businesses

Companies that experience significant fluctuations in business activity due to seasonal factors such as holidays, weather, and consumer habits.

Customer Receivables

Money owed to a business by its customers for products or services delivered on credit.

Net Working Capital

The difference between a company's current assets and current liabilities.